Private equity firm Wellspring Capital Management has reached a deal to acquire Caring Brands International, the parent company of Sunrise, Florida-based Interim HealthCare.
The deal, announced early Monday, is yet another example of PE players becoming more involved in the home-based care space, especially when it comes to home care franchise organizations. There have been four major home care franchisers acquired in 2021, with PE buyers driving three of those transactions.
“We are deeply appreciative of the overwhelming and continued excitement for investing in the home health care space,” Jennifer Sheets, the president and CEO of Caring Brands International and Interim HealthCare, said in a statement shared with Home Health Care News. “Over the past year and throughout 2021, delivery and access to high-quality home-based health care services has never been more essential, and it is rewarding to see such a positive market reaction.”
Terms of Monday’s deal were not disclosed, but Caring Brands was expected to command 11 or 12 times its $45 million EBITDA, according to a report from PE Hub.
Financing for the transaction came from Adams Street Partners, Blackrock, Madison Capital and AEA Investors.
In addition to Interim, Caring Brands is the parent company of the United Kingdom-based home care services company Bluebird Care and the Australia-based Just Better Care. Overall, the Caring Brands network includes 550 locations operated by more than 250 franchise owners worldwide.
Caring Brands has about $1.3 billion in system-wide sales annually, according to the company, which was previously owned by Los Angeles-based PE firm Levine Leichtman Capital Partners.
On its end, Interim HealthCare is a franchise company that provides home health, senior care, hospice, palliative care, pediatric care and health care staffing services through over 330 locations in the U.S. and Saudi Arabia.
“As the home care industry leader, we at Caring Brands International are fully committed to making the home the center of health care and helping more people gain the quality services they need,” Sheets said. “As the newest addition to the Wellspring family, we feel fortunate to partner with an organization that is rooted in the health care industry and recognizes the value home-based health care provides.”
The New York-based Wellspring’s portfolio currently includes 37 companies, two of which are directly involved in health care: RAYUS Radiology and the Chicago-based Help at Home.
Wellspring, previously the majority owner of Help at Home, retained a minority stake after selling the business to Centerbridge Partners and The Vistria Group in November 2020. Help at Home – which provides home care to 67,000 clients through its 169 locations in 13 states – is reportedly attempting to go public by year’s end.
Wellspring also used to own Great Lakes Home Care Services, which merged with Jordan Health Services and National Home Health Care in 2018. That merger ultimately formed the Addison, Texas-based Elara Caring.
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Wellspring’s portfolio revenue in 2020 was approximately $4.5 billion, according to the firm.
“We have been strong advocates of high-quality home-based care providers that enable seniors, individuals with medically complex care needs, and others with disabilities to live independently in their homes,” Naishadh Lalwani, a partner at Wellspring, said in a press release. “Caring Brands International and their franchisees and operators have developed a stellar reputation of empowering individuals to live life on their own terms and we are excited to partner with Jennifer and team to continue to grow that mission.”
A new wave of transactions
Over the past six years, there have been around a dozen large-scale home-based care franchises acquired, with private equity typically leading the charge.
Most of those transactions took place around 2015 and 2016, however, with just a handful happening since then. M&A activity began to pick up again early on in 2021, with Maryland-based Seniors Helpers acquired by Advocate Aurora Health’s investment arm in April.
“This opens a lot of opportunities for us, thinking about what we can be in the broader health care continuum,” Senior Helpers co-founder and CEO Peter Ross told HHCN at the time. “How do you control the overall continuum? How do you own it? It’s very hard for one person, one company or one organization to have all of the parts. Well, I think we’re the first organization in the country that now can say we own the full health care continuum.”
Because PE firms usually buy, bolster, then sell portfolio investments in four- to seven-year windows, transactions tend to come in waves. While the last big wave came several years ago, it appears another one is underway in 2021.
In addition to Caring Brands International and Senior Helpers, Honor acquired Home Instead in August and the PE Firm RiverGlade Capital acquired Home Helpers in April.
Caring Brands was initially acquired by Levine Leichtman Capital Partners in the fall of 2015.
“The Caring Brands management team, led by Jennifer Sheets, has built an incredible business and the investment has been extremely successful for [all] stakeholders,” Matthew Frankel, a managing partner at the firm, said in a statement. “Since investing in 2015, we have completed numerous add-on acquisitions (both domestic and abroad), driven the increased adoption of Caring Brands’ higher-acuity service lines (especially hospice and home health), and added a company-owned branch strategy to further accelerate growth.”
Now, six years later, Wellspring is taking the reins. And while its continued involvement is not surprising, it’s still a good sign for the health of industry, Mark Kulik, the managing director of M&A advisory firm The Braff Group, told HHCN.
“Wellspring is obviously a very well established, major fund, and they’ve got a great track record. … They’re no strangers to the home health marketplace,” Kulik said. “I think this is a part of their comfort zone, and this is an adjacent business to Help at Home. I think they like the prospects for the continued growth [in this space].”
Besides the timing, Kulik also mentioned current inflation issues in the U.S. as a reason that Wellspring would want to do this deal now, as opposed to waiting with the risk of rates rising in the future.
“You’ve also got to believe a lot of tailwinds are lining up,” Kulik said. “You’ve got the Choose Home legislation, and that looks pretty solid right now. You’ve got recent successes like the home health and home care industries really stepping up nationwide and proving themselves during COVID.”
Those positives have pushed some sidelined buyers into the game, giving them more confidence to strike a deal.
Besides those tailwinds, the biggest advantage the home care industry has, both domestically and abroad, is a rapidly aging population.
“We are thrilled to add Caring Brands to the Wellspring portfolio,” Alexander Carles, co-president of Wellspring Capital, said in the press release. “[It] is a perfect fit with our history of investing in care in and around the home and we are excited to support the next phase of growth for the Company and its market-facing brands.”
Additional reporting by Jim Parker.
